Will the communist nation open itself to U.S. trade?

Executive Summary

President Obama's historic announcement in December 2014 that he wants to normalize relations with Cuba, coupled with the easing of restrictions on travel and commerce, has unleashed a huge wave of interest by U.S. companies in the island nation. Some experts warn this enthusiasm is premature, noting that a 56-year-long U.S. embargo against Cuba remains in place, the communist-ruled nation's physical infrastructure is crumbling and its legal, banking and currency systems are byzantine. Some analysts, however, see big opportunities for American businesses able to gain a foothold on the island. Cuba is a market of 11 million people just 90 miles from Florida, and it is in dire need of all types of products and services. But any progress in trade and investment depends largely on politics on both sides of the Florida Straits. As businesses and others ponder the possibilities, these are some of the questions they are asking: Is Cuba ready for increased trade with the United States? Is foreign investment safe in Cuba? Can U.S. companies make money in Cuba?

Resources

Bibliography

Books

Campbell, Al, ed., “Cuban Economists on the Cuban Economy,” University Press of Florida, 2013. Cuban economists assess the island's economic strategy after the collapse of the Soviet Union, documenting both successes and failures.

Cooke, Julia, “The Other Side of Paradise: Life in the New Cuba,” Seal Press, 2014. A journalist examines post-Fidel Castro life in Cuba as revolutionary fervor wanes among younger generations.

Hufbauer, Gary Clyde, and Barbara Kotschwar, “Economic Normalization with Cuba: A Roadmap for US Policymakers,” Peterson Institute for International Economics, 2014. Two economists explain how the United States can guide Cuba's transition to a free-market economy.

LeoGrande, William M., and Peter Kornbluh, “Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana,” University of North Carolina Press, 2015. In an updated edition of a 2014 book, an American University political scientist (LeoGrande) and a National Security Archive expert (Kornbluh) detail the behind-the-scenes negotiations that led to the December 2014 announcement of a rapprochement between Cuba and the United States.

Articles

Mufson, Steven, “On Cuba, as politics advances, business leaders wait for their breakthrough,” The Washington Post, Feb.18, 2016, http://tinyurl.com/jazx65j. U.S. companies hoping to enter Cuba are finding the going slow, even though the rapprochement with Cuba is advancing more quickly.

Robles, Frances, “In Talks Over Seized U.S. Property, Havana Counters With Own Claim,” The New York Times, Dec. 13, 2015, http://tinyurl.com/gsruzvf. A Miami-based journalist examines the legal issues surrounding the resolution of claims to property that was seized in the Cuban revolution.

Robles, Frances, “Stay or Go? Cuban Entrepreneurs Divided Where to Stake Futures,” The New York Times, March 21 2016, http://tinyurl.com/hv3ml3c. A correspondent finds Cuban Millennials are hopeful that the U.S. rapprochement will lead to change in Cuba, and they are opting to stay to form small businesses instead of emigrating.

Whitefield, Mimi, “President Obama talks business with Cuban entrepreneurs,” Miami Herald, March 21, 2016, http://tinyurl.com/zrkkd38. A Miami journalist chronicles President Obama's meeting in Havana with U.S. and Cuban-American business people and Cuban entrepreneurs to encourage them to bridge political and economic divides.

Wilkinson, Tracy, “In Cuba, likely Castro successor keeps a low profile,” Feb. 7, 2015, Los Angeles Times, http://tinyurl.com/jueclhs. A foreign correspondent profiles Miguel Díaz-Canel, whom experts regard as the person most likely to succeed Raúl Castro as Cuba's next president.

Reports and Studies

Font, Mauricio, and David Jancsics, “From Planning to Market: A Framework for Cuba,” Bulletin of Latin American Research, 2015, http://tinyurl.com/hkn5ub3. Latin American studies professors from the City University of New York (Font) and Rutgers University (Jancsics) examine four ways that socialist economies have opened to capitalism and whether these models can work in Cuba.

Mendes, Isa, “Mending Bridges: The Unfinished Business of the U.S. and Cuba,” BRICS (Brazil, Russia, India, China, South Africa) Policy Center, April–May 2015, http://tinyurl.com/hzag2yd. A researcher at the Global South Mediation Unit analyzes the factors that led to the recent thaw in U.S.-Cuba relations and explores future challenges and opportunities.

Sullivan, Mark P., “Cuba: Issues for the 114th Congress,” Congressional Research Service, July 2015, http://tinyurl.com/pva8497. A nonpartisan analysis by a Cuba expert predicts that political repression is likely to continue despite economic reforms.

Vidal, Pavel, and Scott Brown, “Cuba's Economic Reintegration: Begin with the International Financial Institutions,” Atlantic Council, Adrienne Arsht Latin America Center, July 2015, http://tinyurl.com/zcjjej8. An economics professor (Vidal) and a former official with the International Monetary Fund (Brown) say international financial institutions that focus on developing nations can help with Cuba's transition to market-based policies.

Werlau, Maria C., “Cuba's Health-Care Diplomacy: The Business of Humanitarianism,” World Affairs Journal, March/April 2013, http://tinyurl.com/h83ct53. The executive director of a Cuba-focused nonprofit explains how Cuba benefits financially and politically from its export of medical professionals around the world.

The Next Step

Currency

Daniel, Frank Jack, “Cuba offers olive branch ahead of Obama visit but slams embargo,” Reuters, March 17, 2016, http://tinyurl.com/zu53rsu. Cuba's government said it would eliminate a 10 percent tax on exchanges of U.S. dollars for Cuban currency, several days after the White House announced it would lift a ban preventing U.S. banks from processing dollar transactions for Cuban businesses and residents.

Symmes, Patrick, “The Cuban Money Crisis,” Bloomberg Business, April 1, 2015, http://tinyurl.com/qbo84pk. Cuba plans to switch to a single-currency system that eliminates a convertible peso for tourism and relies on a lower-value national peso, but many citizens are hoarding the convertible currency because they distrust the government's intentions.

Infrastructure

González, Ángel, “Alaska Air joins airlines hoping to fly to Cuba,” The Seattle Times, March 3, 2016, http://tinyurl.com/zpsgllc. Eight U.S. airlines are seeking permission from the U.S. Department of Transportation to begin service to Havana, although a Cuban living in the Seattle area says the country lacks sufficient airport and tourism infrastructure for increased air travel.

Lee, Carol, and Felicia Schwartz, “U.S. Competes With China for Influence in Cuba,” The Wall Street Journal, March 18, 2016, http://tinyurl.com/hw2zmnr. Chinese telecommunications companies are improving Cuba's Internet capabilities, but experts say U.S. companies can still get in the game because much of the upgrade is already outdated.

Randle, Jim, “US Companies Head For Cuba – Slowly,” Voice of America, March 20, 2016, http://tinyurl.com/jj67lw5. Many U.S. entrepreneurs considering business opportunities in Cuba are discouraged by the country's poor electrical, transportation and legal infrastructure, says a professor of Cuban-American studies at the University of Miami.

Tourism

Bachman, Justin, “Will Cuba Steal Cruise Ships From Its Neighbors?” Bloomberg Business, March 18, 2016, http://tinyurl.com/jpa38sg. Some Caribbean officials worry that increased cruise travel from the United States to Cuba could harm their tourism industries, but U.S. cruise line executives say new routes likely will bring more revenue to the whole region.

Burnett, Victoria, “American Firm, Starwood, Signs Deal to Manage Hotels in Cuba,” The New York Times, March 19, 2016, http://tinyurl.com/zl2mtzv. American hospitality chain Starwood Hotels and Resorts reached agreements with Cuban state-owned tourism companies to renovate and manage a handful of hotels on the island in preparation for an expected increase in U.S. tourism.

Picchi, Aimee, “Want to go to Cuba? It won't be ‘libre,’ but it is easier,” CBS Moneywatch, March 18, 2016, http://tinyurl.com/zpnuvth. The White House in March eased some restrictions on travel to Cuba, although American tourists still cannot book flights on major airlines or use credit cards there, says the founder of a Cuban tourism company.

Foreign Investment

Green, Alex, “This Alabama company is first U.S. firm to manufacture in Cuba in more than 50 years,” Chattanooga [Tenn.] Times Free Press, March 1, 2016, http://tinyurl.com/jzzvvcc. An Alabama-based company received Cuban and U.S. government approval to open an assembly plant in Mariel that will produce tractors designed for small-scale farms around the country, which could reduce Cuba's reliance on foreign food imports.

Knobloch, Andreas, “German e-bikes conquering the Cuban market,” Deutsche Welle (Germany), Feb. 5, 2016, http://tinyurl.com/jgkxutr. A German bicycle company is working with Cuban investors, travel agencies and tourism officials to develop the charging stations and other infrastructure needed to use electric bikes in Havana and neighboring Cuban cities.

Linthicum, Kate, “U.S. companies line up to do business in Cuba,” Los Angeles Times, March 25, 2016, http://tinyurl.com/zrdrhta. U.S. businesses, ranging from dried-fruit company Sun-Maid Growers to PayPal and Google, are exploring ways to open locations in Cuba or bring their services there, although certain U.S. Treasury and Commerce department rules still prohibit U.S.-based firms from investing in Cuba.

Organizations

Brookings Institution
1775 Massachusetts Ave., N.W., Washington, DC 20036
202-797-6000
www.brookings.edu/
Centrist think tank whose Latin America Initiative researches issues facing Cuba.

Chamber of Commerce of Cuba
Calle 21, No. 661 Esq. a A Vedado, Ciudad de La Habana, Cuba
(53)7-838-1160
www.camaracuba.cu
Cuba's national business advocacy organization.

Council of the Americas
1615 L St., N.W., Suite 250, Washington, DC 20036
202-659-8989
www.as-coa.org
Business think tank dedicated to free trade, open markets and democracy in Cuba and throughout the Americas.

Cuban American National Foundation
2147 S.W. 8th St., Miami, FL 33135
305-592-7768
www.canf.org
Organization founded by Cuban exiles in 1981 that lobbies for the embargo and for ways to promote democracy in Cuba.

#CubaNow
400 N.W. 26th St., #23, Miami, FL 33127
305-905-9452
www.cubanow.org
Political advocacy organization that favors normalizing diplomatic and trade relations with Cuba.

Cuba Study Group
2308 Mount Vernon Ave., #150, Alexandria, VA 22301
571-527-0250
www.cubastudygroup.com
Organization of business leaders seeking to help Cuba move to a market-based economy.

Embassy of the Republic of Cuba
2630 16th St., N.W., Washington, DC 20009
202-797-8518
http://www.cubadiplomatica.cu/sicw/EN/Home.aspx
Opened in 2015, the embassy includes an economic and trade office that provides information on Cuban regulations governing import-export activities.

U.S. Department of State
2201 C St., N.W., Washington, DC 20520
202-647-4000
www.state.gov
Oversees diplomatic relations between Cuba and the United States and, among other things, provides statistical information on Cuba.

U.S. Department of Treasury, Office of Foreign Assets Control
1500 Pennsylvania Ave., N.W., Washington, DC 20220
202-622-2000
www.treasury.gov
Administers and enforces U.S. foreign trade and economic sanctions, including the Cuba embargo.

DOI: 10.1177/237455680208.n1